This is a piece written in collaboration with Brett Grant (Voices for Racial Justice), Clark Biegler Goldenrod (Minnesota Budget Project), Roberto de la Riva (Inquilinxs Unidxs), and Eric Hauge (HOME line). It will be released in four parts over the next few weeks. Read part two here

Who Receives the Renters Credit?

In 2015, about 328,000 Minnesota households received the Renters Credit. Most households receiving the credit had incomes of around $31,000 or less.

According to the Minnesota Budget Project, the average amount of Renters Credit received in 2015 was $636. More than a quarter of the households receiving the Renters Credit included senior citizens and/or people with disabilities; for these households the average credit was $702. The share of households who receive the credit that include seniors or people with disabilities tends to be higher in Greater Minnesota. In 12 Greater Minnesota counties, at least half of the participating households included seniors and/or persons with disabilities.

Racial Equity Implications of the Renters Credit

In Minnesota, racial equity policies to eliminate socio-economic and racial disparities center around the belief that what we look like and where we come from should not determine the benefits, burdens, or responsibilities we bear in our society. Despite Minnesota’s reputation as one of the most progressive and thriving states in the country, we cannot escape the legacy of present and past discrimination. To reverse this legacy, numerous community organizations have adopted policy strategies grounded in racial equity, or “the development of policies, practices and strategic investments to reverse racial disparity trends, eliminate institutional racism, and ensure that outcomes and opportunities for all people are no longer predictable by race,” as a central part of their organizing principles.

A look at the racial composition of renters in Minnesota shows that almost three quarters of low-income black Minnesotans are renting. About 60 percent of people who identify as Ojibwe are renting. Half of low-income Hmong folks in Minnesota are renting, and 90 percent of low-income Somali Minnesotans are renting. For our purposes, we define people as being low-income if they are living at 200 percent of the federal poverty line or below. For example, a family of three with an income of $42,000 is living at 200 percent of the federal poverty line.

Table 1 – Selected Low-Income POCI Populations Living in Minnesota

Estimated Population Renting

Proportion Renting

Black Minnesotans

84,000

74 percent

Somali Minnesotans

16,000

90 percent

Hmong Minnesotans

10,000

48 percent

Mexican Minnesotans

34,000

60 percent

Ojibwe

8,000

58 percent

Lakota

1,300

53 percent

Race Equity Implications for Minnesotans with Children

The implications for many communities of color with children in Minnesota are similar. About 80 percent of low-income black Minnesotans who have children are renting, which translates to about 41,000 Minnesotans. Minnesotans from Mexico who have children are also likely renting in high numbers, about 21,000 Minnesotans.

Table 2 – Selected Low-Income POCI Families with Children Living in Minnesota

Estimated Population Renting

Proportion with Children Renting

Black Minnesotans

41,000

82 percent

Somali Minnesotans

9,000

91 percent

Hmong Minnesotans

6,000

53 percent

Mexican Minnesotans

21,000

62 percent

Ojibwe

3,700

69 percent

Lakota

700

64 percent

Race Equity Implications for Seniors

A look at the racial equity implications for seniors who are renting in Minnesota shows that most low-income senior Somali Minnesotans are renting. Close to 70 percent of low-income black seniors in Minnesota are renting, which is about 5,000 people. About half of Ojibwe seniors are renting. Over 60 percent of Hmong seniors are renting, and about 40 percent of Mexican seniors are renting.

This is a piece written in collaboration with Brett Grant (Voices for Racial Justice), Clark Biegler Goldenrod (Minnesota Budget Project), Roberto de la Riva (Inquilinxs Unidxs), and Eric Hauge (HOME line). It will be released in four parts over the next few week. Read part one here

Renters in Minnesota

Housing policies throughout Minnesota in the form of incentives, regulation, and deregulation, have created a socioeconomic underclass in the state. This class includes people of all demographic makeups, but people of color, women, and renters are disproportionately represented. If we are to help create a truly free and equal state through public policy, we must work to undo the power-imbalances that give rise to these disparities.

In Minnesota and across the country, since the collapse of the housing market, the economy has improved while the lives of people who are poor and working class have gotten worse. The disparities and power-imbalances in housing markets around the country were exacerbated by the Great Recession. Many of the homeowners who had been targeted by predatory lenders saw all equity in their homes evaporate nearly overnight, and were forced into the rental market. The earlier discrimination that locked women and people of color out of the housing market pushed them into the rental market and more recent discrimination locked them out of the prime mortgage market and pushed them into the rental market as well.

This discrimination of the past is reflected in cities such as Minneapolis. Female-headed households are more likely to be cost burdened than male headed households. Black-headed households are nearly twice as likely to be cost burdened as white-headed households. People who identify as LGBTQ are more likely to be homeless. Most federal money spent on housing goes to wealthy homeowners in the form of regressive tax credits. The subsidies that are available for renters are exclusively available for very low-income renters, mostly in the form of public housing and Section 8 vouchers, both of which have seen such massive disinvestment in recent years that only a small percentage of renters who qualify for these programs have access to them. Furthermore, in Minneapolis, private landlords may choose to accept Section 8 vouchers or not, and are free to stop accepting them at any time.

The Renters Credit

According to the Minnesota Budget Project, a research and advocacy organization that works towards a future where all Minnesotans have access to economic opportunities and well-being, the Renters Credit is a tax credit that refunds a portion of the property taxes that renters have paid through their rents. Tax refunds received through the Renters Credit help people who struggle to pay the bills, many of whom belong to communities of color and American Indian communities. Minnesotans report that when they receive this property tax refund, they use it to buy medicine or school clothes for their children, to catch up on bills, or for other basic needs. This spending in turn boosts our local economies.

While the Renters Credit is not a solution to the discriminatory housing practices and policies of the past, it is a tool that provides renters some financial relief and can perhaps offer a chance at more significant and long-term asset/wealth building. Below are a few portions of testimony prepared by HOME Line for one of the times they testified at the Minnesota Legislature about the renters credit:

As has been covered extensively, low-income renters are facing a difficult time with increased housing expenses, while other costs of living are increasing too. Many folks–especially seniors and people with disabilities–are on fixed incomes and are having difficulty making ends meet. That’s where the Renters Credit comes in—it makes a real difference in people’s lives when they receive their refund. Every year around this time (the landlords Certificate of Rent Paid (CRP) form is due to tenants by January 31) is when folks are applying for their refund, and we start hearing from renters across the state about the types of things they spend it on. And then the refund is timed perfectly for families with kids–it comes in mid to late August, when everyone is preparing for the start of school. It’s not uncommon that refunds are spent on clothes and supplies for the new school year, as well as childcare for younger siblings who aren’t off to school yet. One thing we’ve heard consistently is that the Refund goes towards basic needs. It’s almost exclusively spent within the nearby community on items that we all take for granted. We hear from seniors and families who spend their refunds on:

This is a piece written in collaboration with Brett Grant (Voices for Racial Justice), Clark Biegler Goldenrod (Minnesota Budget Project), Roberto de la Riva (Inquilinxs Unidxs), and Eric Hauge (HOME line). It will be released in four parts over the next few weeks.

In Minnesota, people from black and indigenous communities are more likely to be renters than homeowners. For generations of white American families, homeownership has been a fundamental means of accumulating wealth. Their homes have grown in value over time, providing security in retirement, and serving as an asset against which they can borrow for education or other purposes.

For generations of communities of color and indigenous communities who were shut out of early federal programs that promoted homeownership, such as the New Deal mortgage insurance system that generated the mid-20th-century homeownership boom, this missed opportunity to amass wealth that white Americans took for granted is evident to this day. For example, in the African-American community, it is evident in a black-white wealth gap, black-white health disparities, poor living conditions, and dismal educational opportunities for African-Americans.

Black Americans were initially unable to take advantage of the Homestead Act, under which the federal government encouraged westward migration by giving away tens of millions of acres to settler citizens. Former enslaved black Americans gained full citizenship with the 14th Amendment and became eligible for land grants; however, that right became irrelevant with the collapse of Reconstruction, the rise of Jim Crow, and the limitations on the rights of black people that Southern states placed in their constitutions.

This pattern of exclusion continued into the Great Depression. For example, the Homeowners Loan Corporation, established in the 1930s to refinance mortgages, set a discriminatory pattern when it drew lines around black communities — a system known as “redlining” — and decreed them “unsafe” for federal investment.

The Fair Housing Act of 1968 ended the most outrageous forms of housing discrimination and brought a modest rise in black homeownership. But studies continue to show pervasive discrimination in housing, and whites with lower incomes still have greater access than middle-class African-Americans to mixed-income communities.

Unfortunately, the gains and the wealth that the Fair Housing Act of 1968 represented were wiped out a decade ago in the Great Recession, which reduced African-American homeownership rates to levels not seen since housing discrimination was legal in the 1960s. These losses reflect the fact that black people who were eligible for affordable credit were victimized by predatory loans that paid off handsomely for brokers and lenders, but led borrowers to foreclosure.

Current Barriers to Homeownership

An analysis by the nonprofit organization, Urban Institute, of the black-white homeownership gap in 100 cities across the country shows that none have actually closed the ownership gap. The gap was widest in Northeastern and Midwestern cities. The widest gaps, listed in order of severity, were found in Minneapolis, MN; Albany, NY; Buffalo, NY; New York, NY; Salisbury, MD; and Bridgeport, CT. The cities with the smallest gaps were found in Killeen, TX; Fayetteville, N.C.; Charleston, S.C.; Austin, TX; and Augusta, GA.

Communities of color and indigenous communities that were ravaged by predatory lenders during the run-up to the recession have now been shut out of the credit market entirely because of tightened lending standards. Some of these communities have seen the return of a particularly pernicious predatory lending system known as contract for deed. Such contract for deed programs were especially difficult on black communities in Chicago and Baltimore, in particular, during the mid-20th century.